News
News
Upgrade again! Palestinian-Israeli conflict shocks international markets! Or bring new risks to the global economic outlook?
Oct 12,2023
Global markets, already unsettled by high interest rates, face geopolitical uncertainty.
In the morning market on the 9th, due to concerns about the escalation of conflicts, WTI crude oil futures and Brent crude oil futures expanded to 5%, reporting US $86.98/barrel and US $88.72/barrel respectively. U.S. stock futures fell 0.7 percent in early trading on the 9th, while Asian stocks were mixed. The dollar, gold and other safe-haven assets continue to rise.
Market participants believe that the escalation of the Palestinian-Israeli conflict may once again push up oil prices and inflation, suppress stock prices, and increase the attractiveness of safe-haven assets such as the US dollar and gold.
Israeli-Palestinian conflict pushes up oil prices, weighs on stocks
The impact of the conflict on the global market, the most concerned are oil prices and stock price movements.
Regarding the impact of oil prices, the current consensus among market participants is that it will depend on the scale of the conflict, that is, whether it will affect the entire Middle East, especially the response of major oil producing countries such as Saudi Arabia and Iran, and the durability of the conflict. As for share prices, most analysts expect the conflict to affect market sentiment and put pressure on share prices.
Analysts believe that although the timing of the outbreak of the new round of Palestinian-Israeli conflict is very coincidental, it coincides with the 50th anniversary of the outbreak of the fourth Middle East War, and it is likely to become a "bloody assist" for oil prices ",But compared with the first oil crisis, today's situation is very different.
In response to changes in oil prices, Vandana Hari, chief executive of energy consulting firm Vanda Insights, said: "The market opens this week and we may see a conditional surge in crude oil prices."
According to reports, Saudi and US officials said that Saudi Arabia told the White House that if crude oil prices are high, the country is willing to increase crude oil production early next year. The move is aimed at winning support in the US Congress for an agreement under which Saudi Arabia would recognize Israel and be able to sign a defense agreement with the United States.
At the same time, Santos, head of iCapital strategy at the Spanish private banking company, said: "It is clear that if the conflict extends to oil-producing countries led by Saudi Arabia, it may make oil prices more expensive, and the impact of inflation will continue. There will be longer and higher interest rates, and the stock market will fall as a result."
However, the timing of this conflict could not be worse given the negotiations between Saudi Arabia and Israel. The Middle East conflict has a clear impact on oil prices and the market will be worried about higher energy prices, "said Tswali, strategist at State Street Global Markets Multi-Asset."
On the stock market, he said: "We are in a risk-averse investment environment,The conflict may further depress the stock market, because it will shift the market's focus from a soft landing to longer and higher interest rates, which is not good for the stock market in the long run."
The dollar, gold and other safe-haven assets become more attractive.
While risk assets suffer, the increase in safe-haven demand is driving investors to buy safe-haven assets such as gold and the dollar in the short term.
On the 9th, the U.S. dollar generally rose against most major currencies after the opening of the Asia-Pacific trading session, and the price of gold, which also has safe-haven properties, also jumped high. In the past two months, the U.S. dollar has become a direct beneficiary of the rise in U.S. bond yields. As of the end of September, it has risen for 11 consecutive weeks, with a cumulative increase of nearly 7%.
The strong dollar has darkened the recent gold, which has fallen for eight consecutive days as of last Thursday. The CFTC Investor Position Report shows that speculative net long positions in gold are rapidly decreasing. During the long holiday, the gold in stock fell to around $1820.
However, the Israeli-Palestinian conflict has temporarily changed the gold price pattern. In fact, before the news from Israel, the price of gold has turned bullish.
Many institutions believe that the time has not yet come for the structural strengthening of gold prices. The key is to change the basic assumption that interest rates will remain high and last for a longer period of time, and there may still be one rate hike this year.
"this (escalating Palestinian-Israeli conflict) is a good example of why investors need to hold gold in their portfolios, because gold is a perfect hedge against international turmoil," said Cadillo, chief market economist at Sparta Capital Securities."
He also predicted that the dollar would also benefit, "any time there is international turmoil, the dollar will strengthen."
The price of gold, another safe-haven asset, is also benefiting from the escalation of the Israeli-Palestinian conflict. in stock gold opened sharply on Monday, hitting a maximum of $1855.60/ounce. As of the 8th, it was still trading around $1850/ounce.Gold futures rose to above $1865/ounce.
However, the follow-up trend of gold will still be affected by the Fed's policy. Last week, gold prices fell to their lowest level since March, influenced by signals that the Federal Reserve will keep tightening monetary policy and the pressure on interest-free assets caused by soaring US Treasury yields.
Since then, on the 6th began to rebound. At the end of last week, Federal Reserve Governor Michelle Bowman said that the US inflation rate is still too high and that further tightening of monetary policy may be needed. Higher interest rates are usually bad for gold.
Make global trade unimpeded
Contact Phone
Contact Us
Copyright ©Guangzhou Hongdex International Logistics Co.,Ltd
Hotline: 020-84608598
Whatsapp: 18027165010
QQ：2853396538
Email: 2853396545@qq.com
We will provide you with timely feedback
